Ponzi scheme suspects appear in court

Jeffrey A. Guidi, from left, Russell Marne, an attorney representing Gary Armitage, James S. Koenig, and Gary T. Armitage appeared in court on Friday. Guidi, Koenig, and Armitage are accused of orchestrating a $200 million Ponzi scheme that defrauded at least 2,000 investors.Andreas Fuhrmann/Record Searchlight

Gary T. Armitage, a former Santa Rosa financial adviser accused of helping orchestrate a $200 million Ponzi scheme with a Redding businessman, pleaded not guilty Friday in Shasta County Superior Court.

Armitage's partner, Jeffrey A. Guidi, appeared in court as well, but will not enter a plea until Monday.

James S. Koenig, who owned Asset Real Estate Investment Co., the Redding-based property acquisition firm at the heart of the alleged scheme, has pleaded not guilty to 70 counts of securities fraud and residential burglary. He also appeared in court Friday.

Russell Marne, attorney for Armitage, tried to persuade Judge Richard McEachen to reduce his client's $5 million bail, which he called "outrageous."

"He is not a flight risk," Marne said of Armitage. "He has no assets. He has nowhere to go."

Robert Morgester, the deputy state attorney general prosecuting the case and who led the 17-month investigation into the alleged scheme, said Armitage sold 1,500 fraudulent securities, each carrying a lifetime sentence, and ruined more than 1,000 lives. Investors are still coming forward, Morgester said.

McEachen kept Armitage's bail at $5 million.

Koenig, Armitage and Guidi will appear in court together June 22 for a preliminary hearing setting.